Credit growth in October month continued its up-move; stood at 6.9% YoY as compared to 6.8% YoY in September, and expected to improve further in coming months with festive season and pick-up in economic activity, stated IDBI Capital in its report. Improvement in credit growth was led by Industry credit. Industry portfolio growth further picked up in October month at 4.1% YoY (2.5% YoY in September’21). Within Industry portfolio, large industry segment reported (positive) growth at 0.5% YoY versus negative growth in last few months. Agriculture credit growth improved to 10.7% YoY (9.9% YoY in Sept’21). Service portfolio growth stood at 2.9% YoY vs 1% YoY in Sept’21; Retail portfolio growth stood at 11.7% YoY (12.1% YoY in Sept’21).
Key highlights
Moderate Retail credit growth: Post April, Retail growth continues to saw downtrend while reported 11.7% YoY vs 12.1% YoY in September’21. Within retail, Housing growth stood at 8.4% YoY vs 9.0% YoY in September’21, Credit card growth jump to 11.9% YoY vs 9.5% YoY in September’21 while Vehicle loans saw growth at 8.4% YoY vs 8.9% YoY in September’21.
Strong Industry growth; Moderate service credit: Industry credit growth registered strong growth of 4.1% YoY (compared to past 1 year) vs 2.5% YoY in September'21. This was led by Micro & Small industry and Medium industry which registered growth of 11.9% YoY (9.7% YoY in September'21) and 48.6 YoY (49.0% YoY in September'21) respectively due to ECLGS scheme.
"Banking credit growth has improved for fourth consecutive month post range bound (5.5 -6.0%) in last 12 months until June’21. Credit guarantee schemes, Gold loan portfolios, and housing loans are the categories where credit growth is visible. We expect a significant recovery in credit growth during FY22 to reach around 8-8.5%. Our top picks are HDFC Bank, ICICI Bank and Federal Bank," the broking firm added.
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